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Sept. 16 — The Obama administration hailed the World Trade Organization's (WTO) latest rejection
of India's domestic solar policy as a win for American manufacturing and the global
effort to combat climate change.

The WTO
ruled Sept. 16 that India's national solar program violated WTO rules and unfairly discriminated
against imported solar cells and modules.

“This report is a clear victory for American solar manufacturers and workers, and
another step forward in the fight against climate change,” U.S. Trade Representative
Michael Froman said in a news release.

“We strongly support the rapid deployment of solar energy worldwide, including in
India,”
Froman said. “But local content requirements are not only contrary to WTO rules, but
actually undermine our efforts to promote clean energy by requiring the use of more
expensive and less efficient equipment, making it more difficult for clean energy
sources to be cost-competitive.”

The WTO ruling helps bolster USTR efforts to demonstrate how international trade agreements
like the 12-nation Trans-Pacific Partnership can be beneficial to ordinary Americans.

India's government was not surprised by the verdict, according to a Commerce Industry
official. “We were aware of this outcome. India has always adhered to the ruling.
It will do so even now.” However, the ruling will adversely impact India's various
clean energy programs, the official said.

Domestic Content Requirements

The case centers on India's Jawaharlal Nehru National Solar Mission program, which
established a series of policy measures—including new domestic content requirements—with
the goal of deploying 100 gigawatts of solar power by 2022 and reducing the cost of
solar power generation.

The WTO appellate body's Sept. 16 decision upheld a February ruling that found the
program's domestic sourcing requirements violate Article 2.1 of the WTO Agreement
on Trade-Related Investment Measures and Article III:4 of the General Agreement on
Tariffs and Trade 1994.

The panel also rejected India's argument that the measures should be covered by the
government procurement exemption under Article III:8(a) of the General Agreement on
Tariffs and Trade 1994 and said the measures were not justified as a general exception
to the WTO rules under articles XX(j) and XX(d)
of the GATT 1994.

The ruling may now be submitted to the WTO's Dispute Settlement Body for formal adoption
at any point in the next 30 days. India will then have 30 days to determine whether
and how it will comply with the ruling.

Indian Compliance Uncertain

It remains unclear if India will comply with the terms of the WTO's latest ruling
and any reluctance to do so could result in retaliatory trade actions from the U.S.

In February, the Indian government told U.S. trade officials it would not be able
to entirely eliminate the domestic content requirements of its solar energy program
(33 ITD, 2/19/16).

India's Power Minister Piyush Goyal told Froman that India would consider withdrawing
the domestic content provisions of its Jawaharlal Nehru National Solar Mission program
for commercial projects but not for public sector projects.

Goyal told Froman that completely eliminating the program's domestic content requirements
would jeopardize the Indian government's goal of deploying 100 gigawatts of solar
power by 2022.

Retaliatory Case Pending

Last week, India launched a new WTO dispute over a series of alleged U.S. subsidies
and requirements in the renewable energy sector that New Delhi said violated international
trade rules.

The case—which was launched in retaliation for the U.S. dispute against India's solar
program—claimed that eight U.S. states imposed illegal domestic content requirements
and provided subsides that favored domestic products over imported goods.

Though New Delhi did not cite which specific programs it was targeting, it said the
measures violated the WTO's Agreement on Trade-Related Investment Measures and the
Agreement on Subsidies and Countervailing Measures.

India's request for consultations is the first step in the WTO dispute settlement
process and trade officials from India and the U.S. are expected to soon hold meetings
on the matter.

NAM Sees Boost

The Sept. 16 decision cannot be further appealed and will benefit b the U.S. solar
industry, whose exports to India declined by more than 90 percent since the country's
solar program was launched.

“Today's victory will give an important boost to U.S. manufacturing,” said Linda Dempsey,
vice president of international economic affairs at the National Association of Manufacturers.

“This decision also demonstrates why the strong rules-based WTO system and trade agreements
with binding and strong enforcement rules are critical to open markets and eliminate
unfair barriers overseas,” Dempsey said in a news release.

“This is an important victory for the U.S. solar industry and America’s hard-working
209,000-plus solar employees,” said Christopher Mansour, vice president of federal
affairs for the Solar Energy Industries Association.

“Now that litigation is finally behind us, our hope is that India will quickly come
into WTO compliance and we look forward to a path where the solar supply in both our
markets can grow.”

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